Adriano Zumbo accused of ripping off his staff

Over the last year or two Myer’s long and distinguished retail history looked like it might be coming to an end. But a decision in the last few days might have given the company a new lease on life.

Myer’s stock price has shot up from 40 cents to 60 cents after the new CEO announced he was ditching the Clearance Floors. Myer had begun using these floors to get rid of old stock, but it was never exactly clear how Myer was supposed to maintain its gilded reputation while devoting vast acreage to rummage sales.

After the decision from a new CEO with a strong background in retail it will no longer have to solve that conundrum. But this is probably not the last retail stuff-up we will see from Myer, or from the rest of the contenders crowding the Australian retail market. Retail stuff-ups are a huge part of what make this industry so fascinating. Think about Coles flip-flopping over Plastic bags, or Amazon launching with prices that made Australians go pfft. And that’s just this year.

Australian retail has seen some mind-boggling errors.

THE HARDWARE BLUES

No story about Australian retail disasters would be complete without looking at the utterly inept attempt to destroy Bunnings.

The owners of Masters hardware missed. They opened 63 stores by 2016 and then they gave up and the stores all ceased trading within a matter of months.

Masters had a basically decent plan - to get into the filthy profitable hardware business that was dominated by a single major player. The plan was ruined by a dizzying array of blunders at the tactical level.

Instead of simply trying to be Bunnings, Masters tried to improve on it. The lights were brighter. The floors were nicer. There were whitegoods. Innovation is good and I give them points for trying something.

The stupid part was going too hard too soon. Masters had opened dozens of their enormous blue stores all over the country - spending hundreds of millions of dollars - by the time they realised their business model was not working.

By then the cost of fixing the mistake was too high and the quickest way out of their problem was to eat the hundreds of millions in operating losses, write off the hundreds of millions of investment, and move on.

Site of former Masters Hardware at Springfield. Picture: Richard WalkerSource:News Corp Australia

Starbucks came to Australia on a wave of global popularity and ran into a problem. Aussies tried one “venti latte,” thought they sucked, and went back to our local cafe. Within years, the American coffee chain was closing most of the stores they ever opened.

Remember Adriano Zumbo? A few years ago the pastry chef floated through MasterChef like a deity come to earth. People were lining up for hours to buy his macarons. The level of fuss was unprecedented. Now his company is in administration.

Adriano Zumbo of Zumbo Patisserie. Picture: Supplied.Source:Supplied

HOT PIES!

But let’s talk pies.

Pie Face is a classic story of getting ahead of yourself and it occupies a special place in my heart. I remember the excitement as the franchise spread all over the city. I like meat pies and theirs honestly were pretty good.

But when I left the office at lunchtime I couldn’t help notice that while people were queuing for burgers and subway sandwiches, Pie Face stores were mostly empty. And yet they kept multiplying. It felt like there was one on every block.

I might not have thought much of it, but it was early January, nothing was happening and I needed a story, so I started ringing Pie Face stores and asking how business was. It didn’t take long before I stumbled upon a bunch of angry Pie Face owners who had lost lots of money and were planning to take the company to court. This was big – a disaster in the making.

It turned out pies just weren’t that popular; that being open 24 hours a day was pretty expensive; and that company practices were making certain franchisees furious.

The very next year Pie Face went into administration, pursued by angry people that were owed money.

Pie Face was always mainly a business plan. It didn’t exactly have humble origins as a pie shop that was surprisingly overwhelmed with popularity. Instead the founder – a former investment banker - had a pile of money and a plan to take over the world.

That pile got a lot smaller along the way and the world Pie Face occupies these days is much smaller. The brand got bought out of administration by United Petrol Stations, and is now mostly found in their outlets, while the Pieman in chief has, according to his LinkedIn, gone back to investment banking.

One of Pie Face many pies. Picture: Supplied.Source:Supplied

THE GAME AIN’T EASY

The lesson of that is that - despite what some outsiders think - retail is hard. This is why Myer has hired a retail veteran to try to guide it to survival and possible success.

Experience doesn’t save you from screwing up. But it might help you avoid the kind of disasters that prove fatal.